Credit cycles and capital flows: Effectiveness of the macroprudential policy framework in emerging market economies

I assess the effectiveness of macroprudential policy tools in containing credit cycles per se or the impact of portfolio inflows on the cycles in major emerging market economies. The results show that borrower-based tools, measures with a domestic focus, and domestic reserve requirements are particu...

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Bibliographic Details
Published inJournal of banking & finance Vol. 79; pp. 110 - 128
Main Author Fendoğlu, Salih
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.06.2017
Subjects
Capital flows
Credit cycles
Emerging market economies
Macroprudential policies
Reserve requirements
F32
Capital flows
E58
Reserve requirements
Emerging market economies
G28
Credit cycles
Macroprudential policies
G18
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Summary:I assess the effectiveness of macroprudential policy tools in containing credit cycles per se or the impact of portfolio inflows on the cycles in major emerging market economies. The results show that borrower-based tools, measures with a domestic focus, and domestic reserve requirements are particularly effective. The findings are, in most cases, stronger for the recent period during which most of the macroprudential actions are undertaken, and generally hold for alternative definitions of credit cycle, the monetary policy stance, and portfolio inflows. Weaker results emerge for financial-institutions-based or foreign-currency related macroprudential tools.
ISSN:0378-4266
1872-6372
DOI:10.1016/j.jbankfin.2017.03.008